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Money laundering commission in limbo

Money laundering commission in limbo

Efforts to create a body to fight money laundering remain on hold, as a

sub-decree designed to bring it into being languishes at the Ministry of Justice

(MoJ).

"It's been stuck in the committee stage at the MoJ for about six

months," said Graham Shaw, international program officer at the UN's Office of

Drugs and Crime (UNODC).

Officials at the MoJ could not say when the

sub-decree would become law.

The government has made several commitments

to tackle money laundering in recent months: one was at the Association of

Southeast Asian Nations (ASEAN) summit in Phnom Penh last November; another was

given the following month at the Conference on Money Laundering and Terrorist

Financing in Bali, Indonesia.

Money laundering is the process of

converting cash, or other property derived from criminal activity, to make it

appear legitimately earned. The International Monetary Fund estimates that it

accounts for up to 5 percent of the global economy.

The Commission of

Anti-Money Laundering (CAML), which would be under the direct leadership of

Prime Minister Hun Sen, is proposed under the country's Law on Drug Control. The

law was drafted by the government's anti-drugs body, the National Authority on

Combating Drugs, following a UNODC model.

No accurate figures exist on

the scale of money laundering here, but experts believe the problem is getting

worse.

"Our best guess is that money laundering is increasing," said

Shaw. "Cambodia is virtually the only country left in the region without these

regulations. Once again, it's the weak link".

He said that criminal gangs

from mainland, China, Hong Kong and Thailand with links to the local underworld

were the most likely to be involved in money laundering.

A statement

endorsed by the 31 Asia-Pacific countries at the Bali conference indicates that

money launderers are engaged in a wide range of illicit

activities.

"Criminal and terrorist networks engaged in money laundering

and terrorist financing activities were also involved in the trafficking of

illicit drugs, document fraud, arms and people smuggling, and other

transna-tional crimes," the statement read.

The conference heard that the

suspects in the bombing of a Bali nightclub in October 2002 were advanced

$30,000 through a money laundering network.

Shaw said that getting cash

into the electronic banking system and then into an offshore account was the

main aim of money launderers. He explained that moving it as cash was more

difficult as cash is bulky. One million dollars in $100 bills weighs at least

nine kilograms and stands 150 centimeters high.

One of the few measures

designed to tackle the problem is a prakas issued by the National Bank of

Cambodia (NBC) on October 31, 2002. It addressed some of the areas meant to be

tackled in the sub-decree, but does not establish the commission. Another

drawback is that the prakas does not apply to casinos.

What the prakas

does require, though, is that all banks operating locally must self-monitor and

report suspected money laundering. It also prohibits the opening of anonymous

bank accounts, and requires that any transaction over $10,000 is immediately

reported to the NBC.

The sub-decree, on the other hand, would require

casinos to report large transactions, with the amount stipulated by the Ministry

of Economy and Finance (MEF). Casinos would also be required to maintain a

record of all transactions for at least ten years.

At the moment large

amounts of cash can be exchanged for casino chips, then exchanged again for

'clean' cash without any reporting requirements.

The number of people

gambling at casinos just inside Cambodia is substantial: the Bangkok Post

reported recently that more than 7,000 Thais cross the border each weekend to

gamble at two casinos at O'Smach, where they spend up to $360,000 at a time.

There are more than a dozen other casinos in Poipet, Sihanoukville, Koh Kong and

Phnom Penh.

Shaw also confirmed that 'underground banks' are likely

operating here. Underground banking, which has been linked with both terrorist

networks and criminal gangs as a way of moving money around the world, operates

via a network of 'bankers' who personally guarantee an amount of money with

associates.

Once the CAML is established, it would have the authority to

investigate underground banking. It would also monitor a range of financial

transactions that occur outside the banking system, including the trading of

gold and gems.

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